Mortgage Mortgage Underwriting Principles Questions and Answers 2

Question 1

Which ratio compares a borrower's total monthly debt payments to their gross monthly income?

Accepted Answer

Debt-to-income ratio

Answer

Loan-to-value ratio

Answer

Housing expense ratio

Answer

Combined loan-to-value ratio

Question 2

What is the primary purpose of an appraisal in the mortgage underwriting process?

Accepted Answer

To determine the fair market value of the property

Answer

To verify the borrower's employment history

Answer

To assess the borrower's creditworthiness

Answer

To calculate the debt-to-income ratio

Question 3

Under Qualified Mortgage (QM) rules, what is the maximum DTI ratio generally allowed?

Accepted Answer

43%

Answer

50%

Answer

36%

Answer

28%

Question 4

Which of the following would most likely trigger a referral to a senior underwriter?

Accepted Answer

Large unexplained deposits in the borrower's bank account

Answer

A credit score of 780

Answer

Stable employment for 5 years

Answer

A loan-to-value ratio of 70%

Question 5

What does the term 'compensating factors' refer to in mortgage underwriting?

Accepted Answer

Strengths that offset weaknesses in a borrower's application

Answer

Fees charged to compensate the lender for risk

Answer

Adjustments made to the interest rate

Answer

Penalties for late mortgage payments

Question 6

Which document is used to verify a borrower's income from self-employment during underwriting?

Accepted Answer

Tax returns with Schedule C or K-1

Answer

W-2 wage statements

Answer

Pay stubs from the last 30 days

Answer

A verbal verification of employment